Correlation Between Fidelity Freedom and Fidelity Short-term
Can any of the company-specific risk be diversified away by investing in both Fidelity Freedom and Fidelity Short-term at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity Freedom and Fidelity Short-term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Freedom 2015 and Fidelity Short Term Bond, you can compare the effects of market volatilities on Fidelity Freedom and Fidelity Short-term and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity Freedom with a short position of Fidelity Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Freedom and Fidelity Short-term.
Diversification Opportunities for Fidelity Freedom and Fidelity Short-term
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Freedom 2015 and Fidelity Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Short Term and Fidelity Freedom is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity Freedom 2015 are associated (or correlated) with Fidelity Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Short Term has no effect on the direction of Fidelity Freedom i.e., Fidelity Freedom and Fidelity Short-term go up and down completely randomly.
Pair Corralation between Fidelity Freedom and Fidelity Short-term
Assuming the 90 days horizon Fidelity Freedom 2015 is expected to generate 2.44 times more return on investment than Fidelity Short-term. However, Fidelity Freedom is 2.44 times more volatile than Fidelity Short Term Bond. It trades about 0.11 of its potential returns per unit of risk. Fidelity Short Term Bond is currently generating about 0.16 per unit of risk. If you would invest 1,131 in Fidelity Freedom 2015 on August 29, 2024 and sell it today you would earn a total of 59.00 from holding Fidelity Freedom 2015 or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Freedom 2015 vs. Fidelity Short Term Bond
Performance |
| Timeline |
| Fidelity Freedom 2015 |
| Fidelity Short Term |
Fidelity Freedom and Fidelity Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Freedom and Fidelity Short-term
The main advantage of trading using opposite Fidelity Freedom and Fidelity Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Freedom position performs unexpectedly, Fidelity Short-term can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Short-term will offset losses from the drop in Fidelity Short-term's long position.| Fidelity Freedom vs. Copeland Risk Managed | Fidelity Freedom vs. Pace High Yield | Fidelity Freedom vs. Ppm High Yield | Fidelity Freedom vs. Artisan High Income |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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